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Psychological pricing sets price to slightly below a round value, (e.g. $19.99 instead of $20) The seller reduces the price by the smallest possible unit, but relies on the customer to perceive a larger discount.

Is it possible to find out who began to use this psychological method of pricing and when?

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  • Wow, it seems that it's 2000th question asked :)
    – Voitcus
    Jul 30, 2013 at 18:55
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    I was just in a seminar yesterday on myths of invention, particularly the myth of the individual heroic inventor. The assumption in the question that this practice was invented, and the other that it was invented by an individual are suspect. So deeply suspect. Jul 30, 2013 at 21:38
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    @SamuelRussell Well, yes, there might be many "inventors". I changed the question so it might fit better. BTW, how could I see why two people voted to close the question (what their reasons are), so I could improve it?
    – Voitcus
    Jul 31, 2013 at 7:37
  • One VTC as trivia (which it clearly isn't) and the other as social science other than history (???). Seems fine to me.
    – Luke_0
    Jul 31, 2013 at 15:24
  • @AmericanLuke could you please explain what VTC means?
    – Voitcus
    Jul 31, 2013 at 20:16

1 Answer 1

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The practice known as psychological pricing, or odd pricing, was invented in the United States in the 19th century. https://en.wikipedia.org/wiki/Psychological_pricing

Ironically, the original rationale was not to make prices appear lower, but rather to guarantee that customers would receive at least a penny (worth something at the time), in change. One theory is that it was a theft control device to force cashiers to make change (and thereby record the sale) on the newly invented cash register. Another theory is that a newspaper seller who priced his papers at one penny encouraged his advertisers to price their products at X.99, thereby giving back a penny of change for each purchase that could be used to buy the paper itself.

It was only later, in a statistically-driven20th century that marketers realized that customers tended to ignore, or at least underweight the odd cents in calculating the price of products. Once this realization took hold, the practice became widespread.

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    Market hagglers tend to have a better intuitive grasp on the psycology of pricing than scientists do. If there truly is some psycological advantage to this, I'd find it hard to believe it doesn't date back at least to the beginning of the use of arabic numerals in pricing.
    – T.E.D.
    Jul 30, 2013 at 19:45
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    @T.E.D.: Well, that would also be the mid-19th century, when the concept of fixed prices arrived with the department store. In Canada the Timothy Eaton company is credited with that development locally. Prior to that all pricing was haggled directly with the store proprietor. Jul 30, 2013 at 21:42
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    The point of this site is not to copy-paste Wikipedia in your own words.
    – Luke_0
    Jul 31, 2013 at 15:28
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    But this doesn't answer the question. Who (or what company) came up with the idea? Wikipedia doesn't answer the question, so don't quote it as your entire answer. Go find another source that is more informative.
    – Luke_0
    Jul 31, 2013 at 19:28
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    Also the goal of this site is to make the internet a better place to learn history. If this site just becomes an online repository of verbatim (or even non-verbatim) Wikipedia quotes, we're not fulfilling that goal.
    – Luke_0
    Jul 31, 2013 at 19:30

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